WALL STREET PLUMMETS 71 POINTS

The stock market on Friday took its biggest hit since last October's mini- crash after downturns in key overseas markets and disappointing U.S. economic reports.

The Dow Jones industrial average dropped 71.46 points to close at 2,689.20, a 2.59 percent loss. Declining issues swamped advances, with 1,483 down, 217 up and 302 unchanged on the New York Stock Exchange.

"It was a smasher of a day, and it's anybody's guess how this market will open on Monday," said Robert J. Davidson, a broker at Prudential- Bache in Fort Lauderdale.

The Dow dropped by 35 points in the first half hour of trading as Wall Streeters reacted to overnight declines in the Japanese and British markets. The rout continued with only a few pauses until the closing bell.

Volume totaled 183.8 million shares compared with the 154.3 million shares that changed hands on Thursday.

Investors abroad have been concerned about the future of Soviet leader Mikhail Gorbachev as he faces a Lithuanian separatist movement. Those investors also have been concerned about interest rates and inflation. Tokyo's Nikkei index retreated 653.36 points to close at 37,516.77, a drop of 1.7 percent.

"We are so dependent on what's happening all over the world you can't make your decisions in a narrow range anymore," said Charles Beller, a Tamarac investor. "When something like this happens I'm glad I took some profits in the last three months."

The New York markets also reacted to government reports showing that inflation is running at a higher-than-expected level while retail sales are lackluster.

Analysts said the news dealt an abrupt setback to hopes on Wall Street for quick moves by the Federal Reserve to relax credit and encourage lower interest rates, which would send stock and bond prices higher.

Still, some South Florida brokers said investors overreacted.

"We've been in a negative market for the last several days, and I don't think the numbers out (economic reports) had that much importance. But I had three different clients come in and sell stocks they've had for years " said Bruce Sallah, senior vice president at J.W. Charles Securities in Boca Raton.

"Anyone who owns stocks in the Japanese market, or good-quality U.S. stocks, has some very big profits, and there are buyers out there waiting for the market to bottom out," he said.

Some area investors were betting that the bottom isn't here by going short -- selling borrowed stock and hoping to make a profit by replacing it with cheaper shares later on. Others said they would go short if they could.

"There are three or four stocks I'd go short on if I had the money," said Stephen Sanford in West Palm Beach.

"I think the bottom has not yet been reached, and the earnings statements coming out are not going to be good," he said. "I think we're headed into the recession, but how far down we'll go, you'll have to tell me."

So far, there are more signs of slow growth than outright recession, but Davidson at Prudential-Bache said his clients remain nervous about the outlook.

"It's real unclear how this economy is going to roll out in the first quarter," he said.

Information from Sun-Sentinel wire services was used to supplement this report.